Moody's rates Liberty Mutual notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to new senior notes due 2029 being issued by Liberty Mutual Group, Inc.

The company is issuing the new notes in exchange for three series of outstanding notes, Moody's said.

The amount of new notes – if issued – could be up to $1 billion depending on offer acceptances subject to a $300 million minimum, the agency said.

The outstanding notes subject to the offer include 5% senior notes due 2021, 4.95% senior notes due 2022 and 4.25% senior notes due 2023.

The company will not receive any cash proceeds, Moody's said.

The outlook is stable.

The ratings are based on the group's strong market position as a top three P&C insurer in the United States, the agency said, and a top five global P&C insurer.

The company has strong breadth across products, geography and distribution platforms, Moody's said.

These strengths are tempered by Liberty's elevated operational and financial leverage relative to tangible capital, exposure to catastrophe losses and potential for adverse reserve development on its long-tail casualty lines, the agency said.

Another credit concern is the parent company's access to debt-only capital, which constrains financial flexibility in the capital-intensive and often volatile P&C insurance sector, Moody's said.

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